Do you have a high homebuyer IQ?

Despite increasingly higher mortgage interest rates and home prices lately, buyer demand for homes continues to be robust in many markets across the country. With so many dollars on the line, it’s crucial for purchasers to know their stuff before signing on the dotted line.

Americans pride themselves on being welleducated consumers, especially when it comes to purchasing what will likely be the highestpriced item of your life — a home. But here’s a sobering thought: More than 56% of people polled by MoneyWise didn’t pass a quiz of common homebuying terms, such as “down payment” and “mortgage rate.”

Tate Kelly, a real estate broker with Compass in New York City, wasn’t fazed by these findings.

“I think in general, people are not wellinformed enough as homebuyers. Sixty-one percent of participants in the MoneyWise survey said they relied on their friends and family as a source of information. I often see this with firsttime buyers, who tell me that their friend or aunt, for example, gave them advice on the homebuying process — and of course it was not all true.”

Matthew Posey, a residential mortgage loan originator with Axia Home Loans in Austin, Texas, says our collective preference toward “quick and easy” has replaced a need to completely understand the details in major transactions.

“The mindset today is ‘just tell me yes’ instead of ‘tell me what I need to know.’ That speaks to many aspects of our culture, and mortgage financing is no exception,” Posey says. “Younger generations want quick gratification, even if the advice is not accurate or vetted. This gets especially dangerous when you consider the magnitude of the housing market and what’s at stake.”

Emilio DiSpirito IV, a real estate agent, private office adviser and license partner with Engel & Volkers East Greenwich in Rhode Island, attributes this homebuyer illiteracy trend to the fact that financial and life skills are not taught in schools to children and teens.

“Many people watch their parents scrape by week to week and assume that is how bills get paid,” he says. “But purchasing a home without the adequate financial knowledge and guidance can be a deathtrap to your personal or family finances.”

Posey concurs. “The risks involved are very high, especially with an average mortgage loan of hundreds of thousands of dollars,” he cautions. “Do you really want to gamble with more than you make in a year, more than you have in any other debts or more than you hold in your checking account?”

Indeed, prospective buyers who have not been properly educated on terms and definitions, the pluses and minuses of loan programs, and the overall purchasing and financing process can make costly mistakes, according to Courtney Poulos, a broker/CEO with ACME Real Estate in Los Angeles and author of the book “Break Up With Your Rental.”

“Google isn’t always your friend here,” Poulos says. Her advice? “Talk to an agent who is very familiar with the market in which you are buying.”

After all, this is one of the most important transactions of your life, “so you want someone you can trust to give you the best advice throughout the process,” Kelly advises.

After choosing a trusted real estate agent, you’ll want to shop for a mortgage lender and ask plenty of questions of the bank, broker or direct lender you select.

“The best lenders are the ones who take the time to discuss the entire process with you and present you with all the financing options they can offer,” Kelly adds.

To further boost your homebuying smarts, consider taking a first-time buyer education course, which may be offered by a local real estate agency, lender or bank.

“Also, try to get information from multiple levels of the industry. You can start by reading national news articles, then dig deeper into industry specifics from the Consumer Financial Protection Bureau, HUD. gov, and Fannie Mae’s and Freddie Mac’s websites,” Posey recommends.